Ethylene glycol (EG) is mainly used in the production of polyester – in fibres, resins and films – which accounts for roughly 82% of global EG consumption.
Polyester fibres is the main consumer, followed by use in polyethylene terephthalate (PET) resin, the second-largest outlet. The next major outlet is in automotive antifreeze.
Domestic supply returned to the US market in the second half of 2013 following a heavy schedule of plant maintenance in the first half of that year, which left the market tight.
Producers have since been running hard at full, or nearly full, operation, market sources have said.
EG industrial-grade (EGI), also known as monoethylene glycol (MEG), was in abundant supply through the 2013 fourth quarter and remained strong through the first quarter of 2014.
Similarly, diethylene glycol (DEG), which is co-produced with MEG, was also in abundant supply through the 2013 fourth quarter, but is said to be tight during the first quarter of 2014.
However, some market players characterised DEG supply as being readily available.
Firm spot prices in Asia during the 2013 fourth quarter prompted strong export activity from US producers to that region. However, Asia spot prices started to come back down at the start of 2014, making exports there less attractive.
US demand for EG has been softer than usual during 2013, due in part to demand in the downstream PET bottle resin sector not picking up as strongly as it was expected to during the start of its peak season in the spring.
Demand in the winter was slow in PET and healthy in the anti-freeze and de-icing sectors.
March contract prices for EGI are expected to hold steady or move slightly lower than February contract prices, which are at 53-54 cents/lb ($1,168-1,190/tonne) FOB (free on board). Competing dynamics of lower Asian spot prices and adequate supply in the US have created uncertainty about price direction.
DEG contract prices are expected to increase in March from 53-57 cents/lb FOB in February, and March contract pricing for triethylene glycol (TEG) is uncertain with market sources saying that supplies are now plentiful, following tightness in the fourth quarter from strong demand in the downstream natural gas dehydrogenation sector, but that imported cargoes at low prices were causing confusion about market pricing.
Earlier in the year, contract prices in January were up from the previous month before coming down in February.
Export contract prices for EG fibre-grade (EGF) will take direction from the MEG Asian Contract Price (ACP), which was rolled over in March from February. EGF contract prices held steady to slightly down in January and declined in February to 49-50 cents/lb FOB export.
EG anti-freeze (EGAF) barge spot prices have seen limited movement since the end of last year, as sellers and buyers have struggled to reach agreeable price levels. Buyers have been pushing for lower spot prices to match the trend in Asia spot prices, but sellers have found these lower offers unattractive, market sources have said.
EGAF barge spot prices have been hovering in the mid 40s cents/lb FOB range.
Commercial production of EG is by the oxidation of ethylene in the presence of oxygen (or air) and a silver oxide catalyst to produce ethylene oxide (EO), the feedstock for EG. A crude ethylene glycol mixture is then produced by the hydrolysis of ethylene oxide with water under pressure.
A typical production mix is 90% MEG, 9% DEG and 1% and TEG. Fractional distillation under vacuum is used to separate the MEG from the higher glycols.
Demand for EG is expected to pick up in the downstream PET bottle resin market as March unfolds and the PET peak season begins. The peak season typically runs through August.
Meanwhile, as the weather warms, demand in the downstream de-icing sector will slow, though the anti-freeze/coolant sector is expected to stay healthy.
Demand from the natural gas dehydrogenation sector is expected to plummet with the onset of warmer weather, as TEG would no longer be needed to keep the gas from freezing. Summer will be the low season for TEG.
Spot activity EG anti-freeze (EGAF) has been quiet, as players are said to be pulling from contractual volumes first. There has been limited EGAF spot activity thus far this year, market sources have said. Market players have largely said that there are no major plant turnarounds scheduled for 2014.